“Small businesses are not asking for handouts, but for recognition, access, and the tools to thrive,” said Ms Stella Tembisa Ndabeni, Minister of Small Business Development, during the Department of Small Business Development NCOP Budget at the end of July 2025. “Yet, for too long, these entrepreneurs, especially those in our villages, rural towns, and townships, have stood on the margins of opportunity, too often excluded from the formal circuits of capital, markets, and policy attention.”
The Department of Small Business Development (DSBD) has recommitted to bringing the challenges that small businesses face to the centre of its national economic agenda.
The budget presented for the 2025/26 financial year is R 2,918 billion. It is primarily directed towards transfers and subsidies, which account for 84% or R 2,450 billion. The remaining 16% or R 468 million, spread between compensation of employees at R265 million, with goods and services accounting for R197 million and capital at R6 million. Furthermore, it was highlighted that SEDFA receives 77,9% of the transfers and subsidies, or R1,908 billion. The department manages the remaining R542,6 million, accounting for 22,1% of the total transfers.
With these funds, the department aims to bring more MSMEs into the mainstream economy to unlock economic growth and ultimately reach the Medium-Term Development Plan (MTDP) 2024-2029 target of above 3% growth.
Funds from the budget will be used to achieve the following:
- To finance nearly 620 000 MSMEs through SEDFA’s Development Fund.
- To finance another 34 000 MSMEs through SEDFA’s Commercial Fund, targeting high-growth scalable MSMEs.
- To finance approximately 7000 MSMEs through credit guarantees with banks and non-bank financial intermediaries.
- Provide 560 000 MSMEs with pre-investment support, including entrepreneurship support, training, incubation support, formalisation support, as well as assistance in the financial application process.
- To provide 180 000 MSMEs with post-investment support, including coaching and mentoring, business skills training and contract management to ensure our investments are safe.
Breaking Down the DSBD Budget
From the funds allocated to the SEDFA Development Fund will be dispersed to specific micro and small enterprises, R792 million is aimed at financial support for businesses transitioning to formalisation.
R300 million will be dispersed to women entrepreneurs and R300 million to youth entrepreneurs.
Furthermore, rural provinces like the Eastern Cape and Limpopo are prioritised to receive R 118,8 million respectively. Other provinces will receive funds as follows:
- KwaZulu-Natal: R102,96 million
- North-West: R95,04 million
- Mpumalanga: R79,2 million
- Northern Cape: R79,2 million
- Western Cape: R71,28 million
- Gauteng: R71,28 million
- Free State: R55,44 million
The SEDFA Commercial Fund, on the other hand, is more focused on small and medium enterprises that show high commercial viability and prospects for scalability. It will disburse R261,36 million, with Gauteng and KwaZulu-Natal receiving the highest disbursements for funding ready MSMEs and based on our baseline.
One thing that can be found in both the Development and Commercial Funds is the introduction of credit guarantees. This will be used to leverage capital from banking and non-bank financial institutions through Khula Credit Guarantee. The value of credit guarantees taken up by MSMEs will be R985 million.
Additional Support and Funds from the Department of Small Business Development
Local businesses will be empowered through the Township and Rural Entrepreneurship Programme to drive economic growth and job creation in historically disadvantaged areas. R543 million has been allocated through SEDFA. An additional R150 million has also been set aside for rural and township women, and R150 million for township and rural youth.
Furthermore, the Asset Assist Programme (AAP) provides township and rural MSMEs with assistance for productive assets and working capital, allocating R206 million to enable MSMEs to access production equipment, thereby improving productivity, product quality and competitiveness.
The department’s Co-operatives Development Support Programme will receive R100 million and now integrates both financial and non-financial support for co-operatives.
For the Craft Customised Sector Programme, the DSBD has allocated R12,38 million to support creative entrepreneurs in Limpopo, the North West, the Western Cape, Gauteng, the Eastern Cape and KZN.
Fifty districts will also be targeted through the rollout of the Informal Micro Enterprise Development Programme (IMEDP), which provides vital tools and equipment for informal sector businesses. R36,7 million will help support informal businesses in townships and rural areas.
Lastly, the small business hub and infrastructure programme for entrepreneurs and MSMEs that is allocated R310 million for small business hubs and business infrastructure. It will target infrastructure in fifteen districts for building new enabling small business infrastructure, as well as refurbishments. These will be spread across the country, aligned to local industrialisation opportunities, and will integrate the financial and non-financial services we offer as a portfolio.
